(1) The provisions of this
chapter are intended to carry out the purposes of Article XI-A of the
Oregon Constitution. The Legislative Assembly recognizes that its
authority to define the scope and purpose of this chapter is limited by
the purposes expressed in Article XI-A.
(2) The primary purpose of this chapter is to provide loan funds to
qualifying Oregon veterans for the acquisition or improvement of farms
and homes. The Legislative Assembly does not intend, by any past or
present enactment, to establish as a principal purpose of this chapter
the providing of subsidized energy financing. [1983 c.445 §9]
Note: 407.075 was enacted into law by the Legislative Assembly but was
not added to or made a part of ORS chapter 407 or any series therein by
legislative action. See Preface to Oregon Revised Statutes for further
explanation. (1) As used in Article XI-A, Oregon
Constitution, and this chapter, for the purposes of administration:
(a) “Acquisition” means:
(A) Purchase and improvement of a home or farm.
(B) Payment of the balance of the purchase price and interest on a
purchase contract, and the improvement of property thereby acquired.
(C) Refinance of an existing purchase-money mortgage or mortgage in
the nature thereof, and the improvement of property thereby purchased.
(D) Improvement of a home or farm.
(b) “Bonds” includes, but is not limited to, serial bonds, term
bonds, notes, obligations, lines of credit, revolving credit agreements,
loans, financing agreements or other evidence of indebtedness determined
by the Department of Veterans’ Affairs, with the approval of the State
Treasurer, to be necessary or desirable to provide funds for the purposes
expressed in Article XI-A of the Oregon Constitution.
(2) As used in this chapter:
(a) “Committee” means the Advisory Committee provided for by ORS
406.210.
(b) “Home” means any residential-type structure, including
outbuildings and the real property in connection with it, if any,
including long-term leaseholds, which is established, maintained and used
primarily as a principal residence by the veteran.
(c) “Improvement” means new construction or any necessary or
beneficial additions, alterations or changes appurtenant to the home or
farm which protect or improve the basic livability or energy efficiency
of the premises.
(d) “Mobile home” means a structure, transportable in one or more
sections, which is 10 feet or more in width, and contains more than 500
square feet of living space figured on exterior dimensions of the
structure, exclusive of any hitch and is designed to be used as a
dwelling by one family, and which remains as personal property under the
laws of this state. [Formerly 407.010; 2001 c.98 §5; 2005 c.625 §15] (1) It is the policy of
the State of Oregon to make every reasonable attempt to keep a veteran in
the home purchased under the loan program when the veteran is unable to
make required loan payments because of illness, injury, death,
involuntary job loss or economic stress due to factors beyond individual
control. The Department of Veterans’ Affairs, by rule, shall implement
such state policy. Rules adopted by the department under this section:
(a) May provide for a temporary reduction of loan payment.
(b) May provide for any other solution jointly agreed to by the
borrower and the department.
(c) Shall provide for repayment of the amount of any loan payments
reduced under the rules in accordance with terms and conditions agreed
upon by the borrower and the department.
(2) In reducing loan payments under this section, the department
must consider the effect of such reduction on the solvency of the program
as a whole, on estimates of the most probable financial position of the
program for one or more future periods, the condition of the tax exempt
bond market, and the effect on other borrowers in the program. [1982
s.s.1 c.11 §3; 2005 c.625 §16] The Department of
Veterans’ Affairs shall administer the provisions of ORS 407.125,
407.165, 407.205, 407.275, 407.415, 407.495 and 407.515 to 407.565. The
department may adopt all necessary rules not inconsistent with those
sections to carry into effect their provisions. The department may
appoint assistants and agents necessary to expeditious and efficient
administration and fix their compensation. [Formerly 407.020; 2005 c.625
§17] All moneys in the Oregon War
Veterans’ Fund created by ORS 407.495 may be advanced by the Department
of Veterans’ Affairs as loans to any person qualified for loans under the
provisions of section 3, Article XI-A, Oregon Constitution, for the
acquisition of farms and homes, as provided in ORS 407.115, 407.165,
407.205, 407.275, 407.415, 407.495 and 407.515 to 407.565 and not
otherwise. [Formerly 407.030; 1991 c.798 §6; 1995 c.238 §3; 2005 c.625
§18] The Department of Veterans’
Affairs, by rule, may discount a portion of the principal payable to the
department in connection with a home or farm loan or in connection with a
purchase contract for a home or farm if such action results in economic
benefit to the home and farm loan program after considering the time
value of money. [1987 c.509 §4; 2005 c.625 §19] The
Department of Veterans’ Affairs is authorized and empowered, in the name
and in behalf of the state to commence and prosecute to judgment all
suits, actions and proceedings necessary to protect the interest of the
state; to bid in property offered for sale under such proceedings and to
acquire title to property for and in behalf of the state as a result of
such proceedings; to accept deeds from borrowers in lieu of foreclosure;
to sell, transfer, convey, lease or assign any property acquired by the
department for and in behalf of the state; to make repairs and
improvements or alterations; to pay taxes, liens and charges of every
kind superior to the lien of the state; and otherwise to administer such
property in such manner as the department deems to the best interest of
the state. All money received by the department from the sale, leasing or
other disposition of any property shall be paid over to the State
Treasurer and deposited in the Oregon War Veterans’ Bond Sinking Account.
[Formerly 407.080; 1987 c.652 §3; 2003 c.576 §439; 2005 c.625 §20](1) The Department of Veterans’ Affairs may acquire property by
purchase when the acquisition of such property is necessary to protect
the interest of the state because of default in repayment of loans made
in accordance with ORS 407.125 or statutes supplementary thereof. The
department shall exercise control of all the property while the title
remains vested in the state.
(2) The department may take any action and make disbursements as
may be necessary to protect the securities for loans acquired under this
chapter. Any disbursement so made shall be added to the amount due from
the borrower and shall bear interest at the rate then fixed for home
improvement loans under ORS 407.325 or at the rate on the existing loan,
whichever is higher. Any such disbursement shall be made only upon order
of the department.
(3) Funds for the protection of security may be disbursed from the
Oregon War Veterans’ Fund including the Oregon War Veterans’ Bond Sinking
Account as the department shall determine. [Formerly 407.090; 1987 c.131
§1; 1987 c.652 §4; 1997 c.214 §1; 2005 c.625 §21] All deeds, leases,
contracts, releases of mortgages and other instruments necessary or
proper in the administration of this chapter shall be executed in behalf
of the state by the Department of Veterans’ Affairs and shall be
acknowledged by the department; and all deeds, mortgages, notes,
insurance policies, abstracts and other instruments, documents and papers
delivered to the department in the administration of those sections shall
be kept in the custody of the department. [Formerly 407.100; 2005 c.625
§22] The
Department of Veterans’ Affairs may receive and hold for future
disposition conditional payments from borrowers who have executed
mortgages and security instruments under authority of ORS 407.225,
indemnities for fire losses on secured property, and such other sums as
must be held by the department in suspense pending further or final
disposition thereof. Said funds shall be deposited in the State Treasury
in the revolving account authorized by ORS 407.565 until they can be
properly applied to the purposes for which they were paid to and received
by the department. [Formerly 407.120; 2005 c.625 §23] (1) The
Department of Veterans’ Affairs shall make escrow accounts available to
current and future borrowers and contract purchasers in connection with
loan agreements and purchase contracts made under this chapter.
(2) Escrow accounts established under this section shall be
consistent with general lending and servicing standards for real estate
loan agreements in this state and with the standards used by the United
States Department of Veterans Affairs and the Federal Housing
Administration.
(3) Notwithstanding ORS 86.245 (5) and (7), the Department of
Veterans’ Affairs shall pay interest to a borrower or contract purchaser
on funds deposited in the escrow account for the borrower or contract
purchaser in the manner and at the rate of interest described in ORS
86.245 (1) to (4).
(4) The department shall adopt such rules as the department
considers necessary to establish criteria for implementation of this
section.
(5) As used in this section, “escrow account” means any account
which is part of a real estate loan agreement or purchase contract,
whether incorporated into the agreement or contract or as part of a
separately executed document, whereby the borrower makes periodic
prepayment to the department of estimated property taxes, and the
department pays the charges out of the account at the due dates. [1989
c.580 §2; 1995 c.182 §4; 2005 c.625 §24](1) When the Department of Veterans’
Affairs considers such contracts necessary to improve the financial
condition of the loan program conducted under this chapter, the
department is authorized to enter into contracts with lending
institutions under which the lending institutions may provide any of the
following services:
(a) Processing of new loans and purchase contracts; and
(b) Management and servicing of new loans and purchase contracts.
(2) Contracts entered into by the department under this section may
provide that the lending institution:
(a) Receive applications for loans for the acquisition of homes or
farms under this chapter;
(b) Immediately investigate and process an application for a loan
as provided by law; and
(c) For approved loans or contracts, if requested by the
department, service the loan or purchase contract for a period of time
specified by the department.
(3) When a lending institution, pursuant to a contract authorized
by this section, receives an application for a loan for the acquisition
of a manufactured home, as defined in ORS 197.295, the lending
institution shall investigate and process the application in the manner
prescribed in the contract between the lending institution and the
department.
(4) When a lending institution, pursuant to a contract authorized
by this section, investigates and processes a loan application that it
considers eligible for approval under this chapter, the lending
institution shall notify the department and state the reasons why the
loan may be approved under this chapter. The department shall retain
final authority to approve or disapprove the loan. If the department
disapproves the loan, the department shall notify the lending institution
and the applicant of the disapproval and shall indicate the reasons for
the disapproval. When the department is satisfied that all requirements
for approval of a loan have been met by the applicant and the lending
institution and that the property offered as security for the loan
protects the interests of the state, the department shall transfer to the
lending institution an amount of money from the Oregon War Veterans’ Fund
equal to the loan amount approved by the department. The lending
institution shall disburse the money in the manner prescribed by the
department. The lending institution shall record the mortgage, trust
deed, contract or other security agreement relating to the loan and then
shall forward all the original loan documents to the department.
(5) All moneys received by a lending institution as payments on
principal and interest for loans made under this chapter shall be paid to
the department in accordance with the terms of the contract between the
department and the lending institution.
(6) The department and lending institution shall mutually agree
upon the compensation to be paid to the lending institution for services
performed under a contract authorized by this section. Such compensation
may be a fixed annual payment or a percentage of the amount of each loan
or purchase contract processed or serviced by the lending institution
under the contract.
(7) Contracts entered into under this section are exempt from the
requirements of the provisions of ORS 279.835 to 279.855 and ORS chapters
279A, 279B and 279C regarding personal services contracts.
(8) As used in this section, “lending institution” means an entity
that is licensed to conduct business in the State of Oregon exclusively
or in part as a mortgage lender or a conduit for mortgage loans and that,
in the judgment of the department, is capable of meeting the needs of the
department in carrying out this chapter. [1989 c.746 §2; 1993 c.35 §1;
1995 c.238 §4; 1997 c.802 §18; 1999 c.50 §1; 2003 c.794 §273; 2005 c.625
§§25,26]In addition to the powers described in
ORS 407.177, the Department of Veterans’ Affairs also may delegate by
contract to a lending institution any of the powers granted to the
department in ORS 407.165 and 407.225. The department shall retain final
authority to approve or disapprove loans and interpret the duties and
responsibilities of borrowers under this chapter. [1989 c.746 §4; 1995
c.238 §5; 2005 c.625 §27] In exercising the
authority granted to it by ORS 407.177 to 407.181, a lending institution
shall perform only the services that are delegated to it by contract
entered into under ORS 407.177, and shall comply with the terms of the
contract and applicable laws. [1989 c.746 §3] In addition
to, and not in lieu of, the audit required by ORS 297.210 the Department
of Veterans’ Affairs may contract with an independent public accountancy
organization for a review of the cash flow projection for the loan
program established under this chapter and Article XI-A of the Oregon
Constitution and of the assumptions used in developing that projection.
The review shall be conducted in accordance with the review guidelines
developed by the American Institute of Certified Public Accountants
(AICPA). Such contract shall require a written report, copies of which
shall be provided to the Governor, the Secretary of State, the State
Treasurer, the President of the Senate, and the Speaker of the House of
Representatives by the department no later than December 31 of each year.
Payment for the services required under the contract shall be paid from
funds appropriated for the administration of the department. [1982 s.s.1
c.11 §4; 1989 c.489 §1; 1997 c.35 §1; 1999 c.322 §38; 2005 c.625 §28](1) The Director of Veterans’ Affairs shall identify each farm
or home loan made under this chapter with moneys from the Oregon War
Veterans’ Fund which, at the current rate of payment by the borrower, is
not being amortized or will not be fully amortized by the agreed to date.
(2) The director shall notify each borrower making payments on a
loan identified under subsection (1) of this section that, at the current
rate of payment, the loan principal will not be fully paid by the final
payment date. The notice shall also include:
(a) The current principal balance.
(b) The current monthly principal and interest payment.
(c) The estimated monthly principal and interest payment necessary
to reduce the principal balance to zero by the agreed to date.
(d) The estimated time remaining until the obligation is fully paid
at the current payment level and the difference between that time and the
agreed to date.
(3) The notice required under this section shall be made a part of
the annual statement to borrowers for the calendar year 1989 and
thereafter. [1987 c.652 §22]
(1) When making a loan or otherwise extending credit under this chapter
with moneys from the Oregon War Veterans’ Fund, the Department of
Veterans’ Affairs shall comply with Title I (Truth in Lending Act) of the
Consumer Credit Protection Act, as amended (15 U.S.C. 1601 et seq.) in
the same manner required for a bank or national bank, as defined in ORS
706.008, when the bank extends credit in a transaction in which a
security interest in real property is or will be acquired.
(2) In addition to the requirements of subsection (1) of this
section, the department shall notify each person seeking to acquire a
home or farm under this chapter, prior to the signing of a loan agreement
or contract, of the variable interest rate provisions of ORS 407.275,
407.315, 407.325 and 407.335. Information required to be disclosed under
this subsection includes a history of the interest rate increases on
loans during the preceding 10 years and an estimate of the financial
effect that an increase of one percent in the interest rate will have on
the borrower’s obligation under the mortgage, contract or other security
agreement. [1987 c.652 §20; 1997 c.631 §470; 2005 c.625 §29]LOAN PROCEDURES AND CONDITIONS(1) Applications for loans for acquisition of a home or
farm under this chapter shall be made to the Department of Veterans’
Affairs. Loans exclusive of funds disbursed under ORS 407.145 (2) and
407.275 (4) shall not exceed the maximum original principal balance
permitted on a single-family first mortgage loan by the Federal National
Mortgage Association, as published in its announcements and subsequently
included in its Selling Guide, for a home or $185,000 for a farm at a
rate of interest provided by ORS 407.325. Except as provided in
subsection (2) of this section, an eligible individual shall not receive
or, under ORS 407.305, assume more than two loans under this chapter. No
applicant is entitled to borrow more than the maximum amount allowed
under this section, except that when a loan is made on property which is
destroyed by fire or other natural hazard, taken through condemnation or
lost or disposed of for a compelling reason devoid of fault on the part
of the applicant and when the loan is repaid or the property is
transferred by deed or otherwise, the loan may be excluded from
consideration in computing the maximum loan allowable. However, the loan
right provided in this section may be restored not more than once while
an unrepaid balance remains on a previous loan granted to the applicant.
(2) The department may allow an eligible individual to receive or,
under ORS 407.305, assume more than two loans under this chapter when:
(a) The loan received or assumed is an additional loan made for the
improvement of the farm or home acquired with an initial loan for the
acquisition of that property; or
(b) The last official certification of record by the United States
Department of Veterans Affairs or any branch of the Armed Forces of the
United States shows the eligible individual to be at least 50 percent
disabled. However, a loan may be made to an eligible disabled veteran
under this paragraph only if the veteran must acquire a different
principal residence for compelling medical reasons or because the veteran
is transferred by an employer for employment purposes or because the
veteran’s spouse is transferred by an employer for employment purposes
and the spouse provides more than 50 percent of the household income.
(3) For the purposes of this section, an applicant owns a home when
the applicant has fee simple title to the home or is the purchaser of the
home under a contract of sale or other instrument of sale. Earnest money
or preliminary sales agreements, options or rights of first refusal are
not contracts or instruments of sale under this subsection.
(4) As used in this section, “home” includes mobile homes and
houseboats. [Formerly 407.040; 1989 c.677 §5; 1991 c.67 §97; 1993 c.192
§1; 1997 c.36 §1; 1999 c.41 §1; 2005 c.625 §30]No applicant is entitled to
borrow more than the maximum amount allowed under ORS 407.205 other than
for reasons specified in ORS 407.205 except that when the property on
which the loan was made becomes the property of the applicant’s spouse as
a result of a judgment declaring a marriage void or dissolved and the
loan is repaid or remains unrepaid and there is an assumption of primary
liability on the loan by a party, such loan may be excluded from
consideration in computing the maximum loan allowable under ORS 407.205.
[Formerly 407.045; 2003 c.576 §440](1) When the Department of Veterans’ Affairs
receives an application pursuant to ORS 407.205, the department shall
immediately investigate and process it as provided by law. The security
for the loan shall consist of the property to be acquired by the veteran
as a home or a farm. The security shall be secured by a mortgage or
security agreement in the full amount of the loan which mortgage or
security agreement shall be either a first lien or a lien insured by
mortgagee’s title insurance against loss from any prior encumbrance. The
department may make subsequent loans for improvements to the security if
there are no intervening liens between the first lien of the department
created under this section and the recorded liens upon the security
securing repayment of such subsequent improvement loans. Such consecutive
liens, for the purposes of this chapter, shall be deemed collectively as
a first lien upon the security. The mortgage or security agreement shall
provide that the borrower, or any subsequent owner of the secured
property, may pay all or any part of the loan at any time without penalty.
(2) A mobile home shall be secured by a security agreement in the
full amount of the loan and the department shall perfect a security
interest in favor of the State of Oregon. The security agreement shall
provide that the borrower or any subsequent owner of the mobile home, may
pay all or any part of the loan at any time without penalty. The security
agreement shall provide for immediate acceleration of the unpaid balance
of the loan if the mobile home is moved from the original site listed in
the security agreement without first obtaining the written consent of the
department. The security agreement shall also provide that removal of the
mobile home to a site outside of this state shall constitute an act of
default and result in immediate acceleration of the unpaid balance of the
loan.
(3) Loans may not exceed:
(a) 100 percent of the net appraised value on homes that are real
property;
(b) 85 percent of the net appraised value on homes that are not
real property; and
(c) 90 percent of the net appraised value on farms that are real
property. [Formerly 407.050; 1985 c.296 §3; 1997 c.214 §2; 2003 c.49 §1;
2005 c.20 §1; 2005 c.625 §31]
(1) An applicant for a loan solely for the improvement of a home or farm
may receive the loan if:
(a) The applicant has not previously received a loan under this
chapter;
(b) The applicant has received a loan under this chapter for the
acquisition of that home or farm for which there is an unpaid balance and
repayment has been satisfactory; or
(c) The applicant has previously received a loan under this chapter
and there is no unpaid balance remaining on that loan.
(2) Any loan made to an applicant who qualifies under subsection
(1)(b) of this section for a loan solely for the improvement of a home or
farm may be added to the amount due from the applicant and shall bear
interest at the rate prescribed in ORS 407.325. [Formerly 407.065; 1987
c.221 §1; 1997 c.214 §3] (1) Loans may be
made bearing interest at the rate per annum prescribed as provided by ORS
407.325. Loans may be amortized over a period of not more than 30 years
for homes other than mobile homes and not more than 40 years for farms.
Loans for mobile homes may be amortized over a period not exceeding the
expected life of the mobile home, as determined by the Department of
Veterans’ Affairs. The limitations contained in this subsection shall not
preclude the department from later extending the amortization period.
(2) If the ownership of the secured property is transferred by deed
or otherwise to anyone other than the original borrower, the surviving
spouse, unremarried former spouse, surviving child or stepchild of the
original borrower, a governmental entity when the secured property is
transferred for public use or a veteran eligible for a loan under this
chapter and Article XI-A of the Oregon Constitution, who assumes the
previous loan for the property as described in ORS 407.305, the interest
from the date of transfer shall be at the rate per annum then fixed as
provided by ORS 407.335. However, the department, during the term of the
loan, may periodically prescribe the interest rates to be paid by the
transferee.
(3) Ownership of property that constitutes security for a loan made
under this chapter and Article XI-A of the Oregon Constitution may not be
transferred by deed or otherwise to anyone other than the surviving
spouse, unremarried former spouse, surviving child or stepchild of the
original borrower, or a veteran eligible for a loan under this chapter
and Article XI-A of the Oregon Constitution, who assumes the previous
loan as described in ORS 407.305, unless the property is used primarily
as the principal residence of the transferee for at least two years after
the transfer or such shorter period of time as the department for good
cause may allow.
(4) Mortgages, trust deeds or security agreements on property given
to secure any loan made under ORS 407.125 or statutes supplementary
thereof may provide that the taxes and insurance premiums may be paid by
the department from the Oregon War Veterans’ Bond Sinking Account. The
amount so paid may be added to and become part of the principal of the
loan and be repaid as prescribed by the department. The department may
prescribe any method or period for repayment of the amount so paid that
is not in conflict with the mortgage, trust deed or security agreement.
The department may prescribe any method or period for repayment of
interest on the amount so paid that is not in conflict with the mortgage,
trust deed, security agreement or a separate agreement with the borrower.
[Formerly 407.070; 1987 c.221 §2; 1987 c.652 §6; 1987 c.767 §1; 1995
c.238 §1; 2005 c.625 §32] (1)
Notwithstanding the repeal of section 5, chapter 11, Oregon Laws 1982
(first special session), during the term of a loan for which the interest
rate was initially fixed under section 5, chapter 11, Oregon Laws 1982
(first special session), the Department of Veterans’ Affairs may
periodically prescribe the interest rate to be paid by the transferee.
However, the interest rate for such loans may not at any time be less
than the rate initially fixed under section 5, chapter 11, Oregon Laws
1982 (first special session), nor exceed a rate per annum which is one
percent higher than the rate initially fixed under section 5, chapter 11,
Oregon Laws 1982 (first special session).
(2) The department may prescribe the interest rate to be paid by
the transferee at a rate greater than the rate described in subsection
(1) of this section, but only to the extent necessary to avoid invoking
the provisions of section 4, Article XI-A of the Oregon Constitution.
[1982 s.s.1 c.11 §7; 1987 c.221 §3; 2005 c.625 §33]When an ownership interest or possession of a home or
farm securing a loan received under this chapter is transferred to the
spouse or former spouse of the original borrower as a result of any
judicial order or judgment, the Department of Veterans’ Affairs shall be
notified in writing of the transfer by the transferee not later than 30
days after the transfer occurs. If the original borrower remains
obligated under the order or judgment to make the payments on the
principal and interest of the loan, the department shall notify the
transferee when any such loan payment is not received by the 30th day
after the payment is due. [1983 c.420 §5; 2003 c.576 §441; 2005 c.625 §34]When a veteran who is eligible for a loan under this chapter and
Article XI-A of the Oregon Constitution seeks to acquire a home or farm
that is serving as security for a previous loan made under this chapter,
the veteran may choose either to receive a new loan for the property or
to assume the previous loan. If the loan balance for the loan being
assumed does not exceed the amount of the veteran’s entitlement under ORS
407.205, the interest rate to be paid on the assumed loan balance shall
be the rate per annum prescribed under ORS 407.315. In addition to the
amount assumed, the veteran may apply for and receive additional funds to
be applied to the purchase price. The interest rate to be paid on the
additional funds shall be the rate per annum currently prescribed under
ORS 407.325. The sum of the assumed loan balance and the additional funds
shall not exceed the amount of the veteran’s entitlement under ORS
407.205 or the percentage of the net appraised value prescribed by ORS
407.225 (3). An assumption or an assumption with additional funds under
this section shall be deemed to be one loan and the veteran making the
assumption or the assumption with additional funds shall be deemed to be
a borrower for the purposes of ORS 407.145, 407.205, 407.215, 407.325,
407.385, 407.465 and 407.475. [Formerly 407.063; 1985 c.296 §5; 1987
c.221 §4; 1995 c.238 §6](1) When a veteran assumes a previous
loan under ORS 407.305, the interest rate to be paid by the veteran from
the date of assumption shall be the rate per annum prescribed
periodically by the Department of Veterans’ Affairs, taking into
consideration the solvency of the loan program and the interest rates
currently prevailing in this state for loans secured by owner-occupied
residential property.
(2) The department shall make a cash flow projection to determine
if assumptions at the interest rate established under subsection (1) of
this section are among the causes of a negative cash flow projection for
the loan program. The cash flow projection required by this section shall
be an estimate of the revenue received from the repayment of mortgages,
interest earnings, administrative expenses of the loan program, payment
of interest and principal on outstanding debt and other relevant factors
during the period in which current outstanding bonds are required to be
retired.
(3) If the cash flow projection required under subsection (2) of
this section indicates that assumptions of loans at the interest rate
established under subsection (1) of this section are a cause of a
negative cash flow projection for the loan program, the department, by
rule and notwithstanding ORS 407.325 (2), shall increase the interest
rate to be paid for loans assumed under ORS 407.305 to the lowest rate
per annum that assures a positive cash flow projection, but not exceeding
the rate then prescribed under ORS 407.325. [1982 s.s.1 c.11 §15; 1987
c.221 §5; 1987 c.564 §1; 2005 c.625 §35] (1) The Department of Veterans’
Affairs, with the advice of the Advisory Committee, will periodically,
during the term of the loan, prescribe the interest rates to be paid by
the applicant, taking into consideration the current value of the money,
the solvency of the loan program, and the rates’ effect on veterans. If
the department, after considering the factors specified in this section,
determines that there is an economic need for a higher rate of interest
on loans made for the acquisition of mobile homes and houseboats, the
department shall prescribe the rate of interest for the acquisition of a
mobile home or houseboat at not higher than two percent more per annum
than the basic rate established by this section.
(2) Except as provided in subsection (3) of this section:
(a) The rate of interest on loans granted on or after May 27, 1971,
and originally set at five and nine-tenths percent per annum may not be
increased to more than seven and nine-tenths percent per annum.
(b) The rate of interest on loans granted on or after January 1,
1981, and originally set at seven and two-tenths percent per annum may
not be increased to more than nine and two-tenths percent per annum.
(c) The rate of interest on a loan granted on or after May 27,
1971, for the acquisition of a mobile home or houseboat originally set at
seven and nine-tenths percent per annum may not be increased to more than
nine and nine-tenths percent per annum.
(3) The department may prescribe the interest rates to be paid by
the applicant at a rate greater than the rates described in subsection
(2) of this section, but only if the department determines, at the sole
discretion of the department, that such action reduces the probability
that invoking the provisions of section 4, Article XI-A of the Oregon
Constitution will become necessary.
(4) When, during two consecutive fiscal years, the cash flow
projection and the review of the projection performed under ORS 407.185
indicate that the Oregon War Veterans’ Bond Sinking Account will maintain
a balance throughout the term of the projections that exceeds the
succeeding years’ debt service and operating expenses for the loan
program, the department shall prepare a program for reducing the interest
rates charged under this section in such a manner as to insure the future
solvency and self-supporting nature of the loan program. However, no
reduction in interest rates shall occur if the variable rate debt, if
converted to a fixed rate, requires retention of the amounts in order to
meet projections.
(5) Notwithstanding the rate prescribed for acquisition of a home
as provided in subsections (1) to (4) of this section, the department may
periodically establish separate and distinct interest rates for home
improvement loans. [Formerly 407.072; 1985 c.296 §6; 1987 c.221 §7; 1989
c.171 §48; 1989 c.728 §4; 1997 c.214 §4; 2005 c.625 §36]
(1) The Department of Veterans’ Affairs may prescribe fixed or variable
rates on the following:
(a) Loans or purchase contracts made after September 27, 1987, for
acquisition of homes or farms.
(b) Obligations on loans or purchase contracts made on or before
September 27, 1987, where ownership of the property subject to the loan
or purchase contract is transferred after September 27, 1987.
(2) The department may modify loan agreements or purchase contracts
made before September 27, 1987, by changing fixed interest rates to
variable or variable interest rates to fixed, if all the parties to such
loan agreements or contracts agree in writing to such modification. [1987
c.221 §§11,12; 2005 c.625 §37](1) The rate of interest referred to in ORS 407.275 (2) shall be
prescribed periodically by the Department of Veterans’ Affairs, taking
into consideration the solvency of the loan program and the interest
rates currently prevailing in this state for loans secured by residential
property. However, a transfer may not be made at a rate lower than the
interest rate existing on the loan immediately prior to the transfer.
(2) When the department considers it necessary to change the rate
of interest under subsection (1) of this section, the department, after
30 days’ notice to the public, may prescribe a new rate under this
section.
(3) During the term of a loan for which the interest rate was
initially prescribed under subsection (1) of this section, the department
may periodically prescribe the interest rate to be paid by the
transferee. However, the interest rate for such loans may not at any time
be less than the rate initially prescribed under subsection (1) of this
section nor exceed a rate which is one percent higher than the rate
initially prescribed under subsection (1) of this section.
(4) The department may prescribe the interest rate to be paid by
the transferee at a rate greater than the rate described in subsection
(3) of this section, but only to the extent necessary to avoid invoking
the provisions of section 4, Article XI-A of the Oregon Constitution.
(5) Except for a sale or transfer to the original borrower, the
surviving spouse, unremarried former spouse, surviving child or stepchild
of the original borrower, or a veteran eligible for a loan under this
chapter and Article XI-A of the Oregon Constitution, only one sale or
transfer of the property referred to in ORS 407.275 (2) is permitted
after July 20, 1983. In the event of a second sale or transfer of the
property, or any part thereof, the entire unpaid balance of the loan for
the property may become immediately due and payable at the discretion of
the department as prescribed by rule. [Formerly 407.073; 1987 c.221 §8;
1987 c.653 §1; 1989 c.490 §1; 2005 c.625 §38] When a
periodic installment payment due under a loan agreement or purchase
contract made pursuant to this section and ORS 407.169 or under a prior
agreement or contract authorizing a late charge is not received by the
Department of Veterans’ Affairs by the due date, the department may
impose a late charge with respect to any such payment as prescribed in
ORS 86.160 to 86.185. [1989 c.580 §3; 1997 c.40 §1; 2005 c.625 §39](1) When the
Department of Veterans’ Affairs offers for sale a home or farm obtained
for and in behalf of the state under ORS 407.135 and 407.145 (1), the
department shall provide notice of the proposed sale to prospective
purchasers. The notice shall state the minimum bid that will be accepted.
(2) Subject to subsection (3) of this section, the department shall
accept the highest such bid or offer received during the 15-day period
after a home or farm acquired under ORS 407.135 or 407.145 (1) is first
offered for sale unless the person making the highest bid or offer is
disqualified from such purchase based on prior credit history, inadequate
income or other grounds for refusal established in rules adopted by the
department. Prior to such refusal, the person making the highest bid or
offer shall be given the opportunity to purchase the property for cash.
(3) When the highest bid under subsection (2) of this section is
made by a person who is not eligible for a loan under Article XI-A of the
Oregon Constitution, the person who submits the highest bid or offer
received from those persons eligible for a loan under Article XI-A of the
Oregon Constitution shall be given the opportunity to purchase the
property for the amount bid by the highest bidder. The property must be
purchased by matching the highest bid within a period of time and at a
place specified by rule of the department.
(4) When the department sells a home or farm obtained under ORS
407.135 or 407.145 (1) to a person, the department may accept improvement
of the property by such purchaser in lieu of other means of satisfying
the requirements of ORS 407.225 (3). For the purpose of this section, all
purchasers are subject to the provisions of ORS 407.225 (3). The
department shall require the purchaser to provide an improvement plan
containing a description of the proposed improvements to be made and the
cost of the necessary work and materials. An appraiser employed by the
department must certify that the ratio of the purchase price and the net
appraised value of the home and farm after the proposed improvement is
completed will satisfy the requirements of ORS 407.225 (3). The
department may then approve the sale subject to the condition that the
improvement of the home or farm be completed within 180 days after
purchase. Failure by the applicant to complete the improvement within the
time allowed shall be considered a breach of the purchase agreement and
grounds for foreclosure by the department. Upon timely application and a
showing that the improvement cannot be completed within the time allowed
because of circumstances beyond the applicant’s control, the department
may grant the applicant an additional period not to exceed 180 days in
which to complete the improvement.
(5) The rate of interest for a contract made for the acquisition of
a home or farm obtained by the department under ORS 407.135 or 407.145
(1) shall be the rate per annum prescribed by the department.
(6) Notwithstanding subsection (5) of this section, if the
provisions of subsections (1) to (3) of this section have been complied
with and no satisfactory bid has been received, the department, after
considering the time value of money, may sell the home or farm at a
private negotiated sale at any price or at any rate of interest, either
fixed or variable, that the department considers to be necessary and
prudent to sell the property and that provides an economic benefit to the
home and farm loan program that is equivalent to the property being
marketed at the current appraised value of the property and the rate
prescribed under subsection (5) of this section.
(7) Except as provided in this subsection, redemption of a home or
farm obtained and sold by the department under ORS 407.135 or 407.145 (1)
shall be made as provided in ORS 18.960 to 18.985. When the department
accepts improvement of property by a purchaser in lieu of purchase money
or cash down payment under subsection (4) of this section, redemption
shall be made by paying an amount equal to the fair market value of those
improvements actually made to the property under the improvement plan
described in subsection (4) of this section, with interest thereon at the
rate of nine percent per annum from the date of sale. The department
shall determine the fair market value of the improvements and such amount
shall be paid in addition to the amount of purchase money and interest
thereon required under ORS 18.966 and 18.967. [1982 s.s.1 c.11 §2; 1983
c.184 §1; 1985 c.287 §1; 1987 c.426 §3; 1987 c.661 §§5,6; 2005 c.542 §69;
2005 c.625 §40]If the Department of Veterans’ Affairs enters into any
personal services contract under which any other person is authorized to
sell or manage homes or farms obtained for and in behalf of this state
under ORS 407.135 and 407.145 (1), then ORS 407.375 may not apply to the
sale of such homes or farms by that person. [1987 c.661 §4; 2005 c.625
§41](1) Money received as a loan under this
chapter shall be used only for the acquisition of a home or farm.
(2) Except as provided in this section, use of all or any part of a
loan received under this chapter for investment or any purpose other than
the acquisition of a home or farm constitutes an act of default and
results in immediate acceleration of the unpaid balance of the loan.
(3) When the Department of Veterans’ Affairs determines that a
borrower is using loan moneys in violation of this section, the
department shall immediately commence any action or proceeding necessary
to recover for the state those moneys or any property obtained therewith.
(4) A failure by a borrower to move into the home or farm securing
the borrower’s loan and to use it as the borrower’s principal residence
within 60 days after the loan or assumption is made, or within such
extension as may be granted in writing by the department, shall be
conclusively presumed to constitute a violation of this section. A
request for an extension for good cause shall be made in writing within
the 60-day period. The applicant may file a written request for a hearing
within 30 days after a denial of the request for extension.
(5) The department may not approve any rental or lease of a home or
farm that affects the federally tax exempt status of bonds issued under
Article XI-A of the Oregon Constitution. When the rental or lease does
not affect the federally tax exempt status of such federally tax exempt
bonds, the department may approve in writing the rental or lease of a
home or farm after the home or farm is used as the principal residence of
the borrower. The department may establish factors to consider when
determining whether to approve the rental of a home or farm. [Formerly
407.042; 1987 c.767 §3; 1991 c.262 §2; 1995 c.238 §7; 1999 c.46 §1; 2001
c.98 §1; 2005 c.625 §42]GENERAL OBLIGATION BONDS In order to provide funds for the
purposes specified in Article XI-A of the Oregon Constitution, bonds may
be issued in accordance with the provisions of ORS 286.031 to 286.061.
Bonds issued under this section may be issued on a federally tax exempt
or taxable basis. Bonds issued on a federally tax exempt basis may be
issued under any applicable provisions of the Internal Revenue Code as
may be determined by the Department of Veterans’ Affairs. The department
shall enter into such covenants and agreements with bondholders as may be
necessary or appropriate to maintain the federally tax exempt status of
interest on bonds issued on a federally tax exempt basis. [Formerly
407.140; 2001 c.98 §2; 2005 c.625 §43] In issuing bonds under ORS
407.415, the State Treasurer may structure an issue of bonds with regard
to amounts, maturity dates, interest rates and such other terms and
conditions of the bonds. In order to meet the specific requirements of a
selected group of applicants for loans under this chapter and before
asking the State Treasurer to structure an issue of bonds under this
authority, the Department of Veterans’ Affairs may consider factors
including, but not limited to, the number of applications and loans on
hand, the amount of debt that will be financed or refinanced by the
issue, directly or indirectly, the solvency of the program as a whole,
the current value of money, the condition of the tax exempt and taxable
bond markets and the effect of the issue on all veterans. [1982 s.s.1
c.12 §4; 2001 c.98 §3; 2005 c.625 §44]
Notwithstanding the general obligation and revenue bond limits required
by ORS 286.525, on behalf of the Department of Veterans’ Affairs, the
State Treasurer may issue general obligation bonds in an amount not to
exceed the amount reasonably expected to be advanced for the payment of
taxes for veterans each tax year. Such bonds shall mature in no more than
18 months and may be sold at public competitive bid or private negotiated
sale, as determined by the State Treasurer. [1983 c.445 §11]LIFE AND MORTGAGE INSURANCE (1) Subject to the
limitations provided for in this chapter, the Department of Veterans’
Affairs may provide loan cancellation life insurance for any person who
receives or assumes a loan or makes a contract under this chapter for the
acquisition of a home or farm, and the spouse or former spouse of that
person.
(2) The insurance may insure the life of the person who receives or
assumes the loan or who is the contract purchaser and the life of the
spouse or former spouse of that person for all or a portion of the amount
of principal and interest due on the state loan or contract. However, for
each loan or contract, the lives of not more than two persons shall be
insured. The State of Oregon shall be named the beneficiary of the
insurance. When an individual insured under this chapter dies, the
proceeds of the insurance shall be used to pay all or the insured portion
of the balance of the state loan or contract, and the department shall
issue a revised payment plan or a satisfaction of the loan or contract.
(3) The Oregon Department of Administrative Services shall procure
loan cancellation life insurance to meet the requirements of this chapter
in compliance with the laws governing the purchase and furnishing of
services to state agencies. [Formerly 407.074; 1985 c.221 §1; 1987 c.132
§1; 2005 c.625 §45] Any person receiving
or assuming a loan or making a contract under this chapter for the
acquisition of a home or farm, and the spouse or former spouse of that
person, may be insured under the insurance provided for by ORS 407.465
upon complying with such rules relating to that insurance as the director
may adopt. [Formerly 407.076; 1985 c.221 §2; 1987 c.132 §2] As used in ORS
407.480 to 407.490:
(1) “Insurance” means any mortgage guarantee or mortgage insurance
against financial loss by reason of:
(a) Collection activity;
(b) Foreclosure; or
(c) Foreclosure by the Department of Veterans’ Affairs under ORS
407.135.
(2) “Mortgage” includes a trust deed. [1989 c.677 §2; 2005 c.625
§46](1) The Department of Veterans’ Affairs may enter into an
agreement with any public or private organization or with any federal or
state governmental agency to provide insurance for qualified mortgages.
(2) The terms of the agreement for insurance, including the amount
of insurance and the premium therefor, shall be agreed upon by the
department and the organization or agency.
(3) Insurance provided under this section may not exceed coverage
of the loan balance for property secured by a mortgage or trust deed to
the department.
(4) If a qualified borrower borrows an amount under this chapter
that is 80 percent or less of the net appraised value of the home or farm
that secures the loan, the department may approve the loan without
requiring insurance. [1989 c.677 §3; 1993 c.192 §2; 1995 c.238 §2; 2005
c.625 §47] After
assignment transfer and delivery by the Department of Veterans’ Affairs
of all rights in the insured property to the organization or person
providing insurance, the department shall not be liable to any borrower
for any claim or grievance arising out of the insurance agreement or the
loan agreement. [1989 c.677 §4; 2005 c.625 §48]FINANCES (1) The money
arising from the sale of each issue of bonds authorized under section 2,
Article XI-A, of the Oregon Constitution, shall be deposited in the State
Treasury and be credited to a special fund separate and distinct from the
General Fund, to be known as the Oregon War Veterans’ Fund; which fund
hereby is appropriated for the purpose of carrying out the provisions of
this section and ORS 407.115, 407.125, 407.165, 407.205, 407.275, 407.415
and 407.515 to 407.565 and to purchase bonds issued for the purposes of
such provisions. With the approval of the Department of Veterans’
Affairs, the moneys in the fund not immediately required for loaning may
be invested as provided in ORS 293.701 to 293.820. The earnings from such
investments shall inure to the Oregon War Veterans’ Fund.
(2) In addition to the money arising from the sale of such bonds,
the Oregon War Veterans’ Fund shall also consist of:
(a) All moneys received as payments on principal and interest of
loans made under ORS 407.125;
(b) All moneys received as accrued interest upon bonds sold;
(c) All moneys derived from tax levies provided for in ORS 291.445;
(d) All moneys derived from the sale, rental or administration of
property acquired by foreclosure or other proceeding, or deed;
(e) All moneys received as interest earned on the investment of
moneys in the Oregon War Veterans’ Fund;
(f) All moneys received as proceeds from the sale of refunding
bonds; and
(g) All other moneys accruing under this section and ORS 407.115,
407.125, 407.165, 407.205, 407.275, 407.415, 407.425, 407.435, 407.555
and 407.565.
(3) All moneys in the Oregon War Veterans’ Fund are continuously
appropriated to the Department of Veterans’ Affairs for the following
purposes:
(a) To carry out the provisions of this section and ORS 407.115,
407.125, 407.165, 407.205, 407.275, 407.415, 407.425, 407.435, 407.555
and 407.565;
(b) To purchase bonds issued for the purposes of such provisions;
and
(c) Except for moneys derived from the sale of bonds or from tax
levies, for payment of expenses of the administration of this section and
ORS 407.115, 407.125, 407.165, 407.205, 407.275, 407.415, 407.425,
407.435, 407.555 and 407.565.
(4) With the approval of the department, the moneys in the Oregon
War Veterans’ Fund not immediately required to provide loans for the
acquisition of farms and homes may be invested as provided in ORS 293.701
to 293.820. The earnings from such investments shall be credited to the
Oregon War Veterans’ Fund. [Formerly 407.160; 1987 c.652 §10; 1991 c.220
§11; 2005 c.625 §49](1) When the Department of Veterans’ Affairs determines that
an applicant’s loan may be approved in accordance with this chapter, the
department, before making a loan commitment, shall reserve an amount of
money in the Oregon War Veterans’ Fund equal to the amount requested by
the applicant to be used only for payment to the applicant which shall be
set aside in the Direct Commitment Reserve Account.
(2) Moneys in the Oregon War Veterans’ Fund Direct Commitment
Reserve Account shall be reserved as loan proceeds for an applicant under
subsection (1) of this section and may not be used for any other purpose
unless the applicant cancels the application for the loan prior to
receipt of the loan proceeds. [Formerly 407.035; 2005 c.625 §50]
(1) The Oregon War Veterans’ Bond Sinking Account is created as a
restricted account within the Oregon War Veterans’ Fund. The sinking
account shall consist of all moneys received as payments on principal and
interest of loans made under ORS 407.125; all moneys received as accrued
interest upon bonds sold; all moneys derived from tax levies provided for
in ORS 291.445; all moneys derived from the sale, rental or
administration of property acquired by foreclosure or other proceeding,
or deed; all moneys received as interest upon investments of the account
and the Oregon War Veterans’ Fund; all moneys received as proceeds from
the sale of refunding bonds; and all other moneys accruing under ORS
407.115, 407.125, 407.165, 407.205, 407.275, 407.415, 407.495 and 407.515
not required to be credited to the Oregon War Veterans’ Fund.
(2) Disbursements from the sinking account shall be made upon
submission of duly verified claims, approved by the Director of Veterans’
Affairs, to the Secretary of State, who shall audit the same in the
manner that other claims against the state are audited. The moneys in the
sinking account, other than those derived from tax levies and from sales
of refunding bonds, hereby are continuously appropriated for payment of
expenses of administration of ORS 407.115, 407.125, 407.165, 407.205,
407.275, 407.415, 407.495 and 407.515 to 407.565. The moneys in the
sinking account may be invested as provided in ORS 293.701 to 293.820.
(3) Amounts in the sinking account shall be held and set aside
separately from the amounts in the Oregon War Veterans’ Fund and any
other funds or assets of this state, but such account may be accounted
for as part of the Oregon War Veterans’ Fund.
(4) The debt service reserve account within the sinking account
shall be maintained as a subaccount within the sinking account dedicated
to provide funds for the payment of bonds issued under authority of
Article XI-A of the Oregon Constitution.
(5) Nothing in this section shall be construed so as to impair any
covenant or agreement with the holders of such bonds heretofore entered
into by the director on behalf of this state with respect to the
maintenance of the sinking account as heretofore constituted and any such
covenant and agreement shall remain in full force and effect.
(6) The director may create subaccounts in the sinking account
necessary for appropriate administration of the director’s duties
including, but not limited to, providing for the issuance, security,
payment or administration of bonds or to preserve the federally tax
exempt status of bonds issued on a federally tax exempt basis. The
director may segregate such subaccounts from other subaccounts used for
other purposes including, but not limited to, the issuance, security,
payment or administration of bonds or other obligations, whether
previously or subsequently issued. [Formerly 407.170; 1987 c.425 §7; 1987
c.652 §13; 1989 c.932 §4; 1991 c.220 §12; 2001 c.98 §4]If, at any time, there are applications for loans aggregating
a total in excess of the money available therefor in the Oregon War
Veterans’ Fund, the Department of Veterans’ Affairs may transfer to said
fund any moneys in the sinking account, except those derived from tax
levies and those received from the sale of refunding bonds. When
sufficient funds are available in the Oregon War Veterans’ Fund, the
department may transfer back to the sinking account an amount not
exceeding the total so transferred from the sinking account to the Oregon
War Veterans’ Fund. [Formerly 407.180; 1987 c.652 §14; 2005 c.625 §51] Except as provided in ORS
407.415, all claims duly approved by the Department of Veterans’ Affairs,
incurred in pursuance of ORS 407.115, 407.125, 407.165, 407.205, 407.275,
407.415, 407.495 and 407.515 to 407.565, shall be paid by warrants drawn
upon the State Treasurer by the Oregon Department of Administrative
Services upon the appropriate funds for the payment of such claims.
[Formerly 407.190; 2005 c.625 §52] The Oregon Department of Administrative
Services is authorized to draw a warrant on the Oregon War Veterans’ Fund
in favor of the Department of Veterans’ Affairs in a sum not to exceed $2
million, which sum shall constitute an advance to be used in anticipation
of the verified vouchers supplied in accordance with this section; and
may be used only as a revolving account, separate and distinct from the
General Fund, to be maintained with the State Treasurer, for receipt and
disbursement of moneys received under authority of ORS 407.165 and for
payment of general operating expenses. All reimbursement vouchers for
claims paid from the revolving account shall be verified by the
Department of Veterans’ Affairs and presented to the Oregon Department of
Administrative Services for payment. The warrants issued by the Oregon
Department of Administrative Services shall be drawn in favor of the
Department of Veterans’ Affairs and shall be used to reimburse the
revolving account. [Formerly 407.200; 1989 c.966 §45; 2005 c.625 §53]MISCELLANEOUS No right,
payment or proceeds of any loan made under ORS 407.125 or statutes
supplementary thereof shall be subject to garnishment, attachment or
execution or the claim of any creditor; nor shall any such right or
payment be capable of assignment except as may be necessary for
completion of any loan applied for and then only under such rules and
regulations as may be prescribed by the Department of Veterans’ Affairs.
[Formerly 407.110; 2005 c.625 §54]
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